Speech by Mr Heng Swee Keat, Minister for Finance at The Tsinghua University School of Economics and Management (SEM), Tsinghua University, Beijing25 Nov 2017
Singapore-China Relationship: Enduring Ties, New Partnerships for a Better Future
Re-emergence and Rise of China
4. China was an economic powerhouse during ancient times.
5. Up till the early 1800s, one of the global economic centres of gravity was China. China accounted for a quarter to a third of the world’s GDP. China was at the forefront of invention – gunpowder, the compass and paper-making.
6. Over time, the Western powers were spurred by competition to look for new resources and markets, and saw trade and colonisation as strategic imperatives. In the late 18th century, the industrial revolution began in Britain and spread to the rest of western Europe and the US, bringing with it increases in income through the skilful use of technology and productivity growth. China, in comparison, was relatively self-sufficient and turned more inward-looking. In 1793, British envoy Lord Macartney called upon the Qing Emperor Qianlong to request that China open its doors to trade with the outside world. China rejected it, because it felt it had everything it needed.
7. In the 19th century, the West eventually overtook China. By the mid-20th century,
Western Europe and the US accounted for half of the world’s GDP, while China’s share was only about 5%.
8. After the Great Depression and two World Wars, the reconstruction of a new global economy began in the 1950s. China adopted a series of Five-Year Plans from 1953 to modernise its economy and map out its long-term strategies for economic development.
9. China has since re-emerged as one of the strongest growing economies after it started opening up and embarking on market reforms.
10. In 1978, Mr Deng Xiaoping announced a new “open door” policy. China created special economic zones to attract foreign capital and businesses, and embarked on domestic agricultural reforms. Dr Goh Keng Swee, Singapore’s former Deputy Prime Minister and Finance Minister, was an economic advisor on Special Economic Zones to China’s top leadership from 1985 to 1990 .
11. China took another bold step when it joined the World Trade Organisation (WTO) in 2001. I was in Doha when China entered the WTO in 2001. It was a very significant event. Entering the WTO opened up the Chinese market to global competition and allowed China to be integrated in the global economy.
12. Opening up stimulated reforms, and the results have been impressive. In the last 17 years, China has quadrupled its per capita GDP, which no major economy has done in such a short time. When you think about it, for the country with the world’s largest population to be able to achieve that, it is a very remarkable achievement. Chinese companies are expanding and internationalising. E-commerce giants Tencent (腾讯) and Alibaba (阿里巴巴) are now among the world’s top 10 companies by market capitalisation. DJI (大疆创新), which is the market leader in consumer drones, and BYD (比亚迪), a major manufacturer of batteries and electric cars, are global tech giants. Tsinghua alumni have founded successful companies like Douban (豆瓣), Meituan.com (美团网), and Sohu (搜狐).
13. China’s transformation over the past few decades has steered it into a new era of openness and engagement with the world. China is forging new ground in deepening external linkages with initiatives such as the Belt and Road Initiative and the “Going Out Strategy” (走出去战略). China is working towards accomplishing its two centennial goals, and remains outward-looking, confident, and progressive. Singapore believes that China’s success is not just good for its citizens. It will continue to open up new opportunities for the world.
14. Now let me talk about Singapore-China friendship over the years.
15. Throughout China’s transformation journey, Singapore and China’s friendship has grown. This friendship was built upon the strong foundations laid by the late leader Mr Deng Xiaoping and our founding Prime Minister Mr Lee Kuan Yew.
16. As early as 1976, the late Mr Lee visited China, long before Singapore and China formed diplomatic relations in 1990. This was followed by Mr Deng Xiaoping’s visit to Singapore in 1978. Mr Deng Xiaoping was impressed by Singapore’s development, and saw how an open economy had helped Singapore grow. He said, and I quote: “新加坡共和国在李光耀总理的领导下，在发展国民经济方面，取得了显著的成就。在国际事务中，新加坡奉行不结盟政策，坚持同各国人民友好相处，坚持东盟提出的东南亚和平、自由、中立区的主张，积极加强同发展中 国家的团结和经济合作，注意同发达国家发展经济贸易关系。” 
17. Mr Lee told Mr Deng Xiaoping that whatever Singapore achieved, China could do better. Mr Lee believed in China’s ability to dramatically transform itself, and that China is, I quote, “the biggest player in the history of the world”. As Mr Lee’s Principal Private Secretary, I had the opportunity to accompany him on his visits to different parts of China to understand China’s development. Mr Lee often explained China’s importance and potential for growth, given its vast size, high quality of talent and strong work ethics.
18. The exchange of visits laid the foundation for close ties between Singapore and China, which have continued to the present day.
19. It sowed the seeds that led to the establishment of the Suzhou Industrial Park (SIP) in 1994, the first Government-to-Government project between Singapore and China. SIP adapted Singapore’s “software” to
China’s context to achieve economic development, social cohesion and environmental protection. Chinese officials have transformed SIP into a very successful modern integrated township,
where residents work, live and play. Useful elements have been adapted in other Chinese cities. They have done better than Singapore in some aspects. There is a lot that we can learn from each other.
20. I hope that SIP will continue to be a pathfinder. I just visited SIP two days ago. I called on Party Secretary Lou Qinjian, and chaired the 11th Singapore-Jiangsu Cooperation Council with Jiangsu Governor Wu Zhenglong. We had good discussions on how Jiangsu can continue to attract investments and play a role in innovation and international collaborations under the Belt and Road initiative.
21. Bilateral cooperation has continually evolved to take into consideration both countries’ development priorities and capabilities. I am happy that we have two other Government-to-Government projects – the Sino-Singapore Tianjin Eco-city and the China-Singapore (Chongqing) Connectivity Initiative.
22. Over the years, our leaders continue to maintain strong ties. After Mr Xi Jinping entered the Politburo Standing Committee of the Communist Party of China in 2007, the first foreign leader he met was Mr Lee Kuan Yew. Mr Lee said that Mr Xi Jinping struck him as “a man of great breadth”. In 2010, then Vice-President Xi Jinping and Mr Lee unveiled a sculpture of Mr Deng Xiaoping in Singapore to commemorate the 20th anniversary of diplomatic relations. It is inscribed with Mr Deng Xiaoping’s famous line “发展才是硬道理” (development is of overriding importance). Most recently in September, Singapore’s Prime Minister Lee Hsien Loong visited China. This was the last official visit received by China before the 19th Party Congress. Building on the foundation of our ties, President Xi and Prime Minister Lee agreed that our two countries share strategic congruence and common interests in many areas. With each new generation of leaders, we have been establishing new friendships, and hope that new friends will also become old friends and good friends (新朋友也会成为老朋友、好朋友).
23. The Singapore-China relationship is aptly characterised as an “All-Round Cooperative Partnership Progressing with the Times” (与时俱进的全方位合作伙伴关系).
Global Challenges and Opportunities
24. As we move forward, there are a number of longer-term challenges and opportunities that affect the global economy. Let me highlight three – ageing population, slowdown in productivity growth, and widening divides in society.
25. First, major economies of the world are having to manage ageing populations.
26. Population ageing is a problem in some parts of Europe, and is particularly acute in Asia, which is ageing faster than any region in the world. With smaller workforces, the IMF estimates that the rapidly greying economies of China, Japan, Korea, and Thailand could face lower annual GDP growth by up to one percentage point. In China, the working population aged 16 to 59 is expected to fall by 23% by 2050. This year, 1 in every 7 Singaporeans are aged 65 and above. By 2030, in less than 15 years’ time, it will be 1 in 4.
27. This means higher healthcare expenditures, a slowdown in labour force growth, and a lower old-age support ratio, which will affect fiscal positions and economic growth.
28. Second, we have seen a global slowdown in productivity growth, even as technological disruption is affecting individuals, firms and entire industries.
29. New technologies present new opportunities, and create new industries and value. Artificial Intelligence, Blockchain, and the Internet-of-Things can improve our lives in areas such as healthcare, digital payments, smart cities and many others. Technology also enables new business models, such as e-commerce. And the growth of e-commerce in China is most impressive.
30. However, technology can also displace traditional businesses and jobs, causing anxiety to workers and industries. The value on certain types of skills will grow, while some existing skills can be made redundant.
31. Ironically, despite the promises of technology, productivity growth has slowed around the world in recent years. This is called the Solow paradox. In Economist Robert Solow’s words, “You can see the computer age everywhere but in the productivity statistics”. The slowdown in productivity growth comes with the stagnation of middle-class wages.
32. Third, in many countries, we see widening divides in society and a weakening of social cohesion.
33. Income inequality is rising in many parts of the world. Today, many economies resemble more of a winner-takes-all economy, with machines taking over lower-end labour, while value creation and wealth accumulation are concentrated at the upper end.
34. We also see other fault lines emerging. The threat of terrorism created social divides across race and religion, and extremists are exploiting and widening them. There are also many other tensions – immigrants versus locals, young versus old, conservatives versus liberals.
35. Such divides have led to growing anxieties and frustrations with the ruling elites,
affecting social cohesion. There has been an inward-looking mood in some parts of the world. Globalisation becomes an easy scapegoat for domestic policy failings. We have seen this with Brexit, and with the US’ withdrawal from the Trans-Pacific Partnership and the Paris Agreement on climate change. People lose faith in their institutions. They reject the status quo. They want change.
36. These are deep, complex, and long-term challenges that many countries will face to varying degrees. At the same time, each country also faces unique challenges of their own. The challenges and opportunities that Singapore and China face have both similar and different elements. China is of course much larger than Singapore. But we can work together for a better future.
Looking Forward: Cooperation and Partnerships
37. Allow me to share my thoughts on the three principles, five potential areas, and one vision in our cooperation (三大原则，五大有潜力的合作领域，一个理念).
38. The three principles (三大原则) are:
a. One, to move with the times and stay relevant (与时俱进, 顺时应变). The challenges we face are getting more complex. As our countries progress, our cooperation will have to evolve to meet new needs and interests to remain relevant.
b. Two, to collaborate through all-round partnerships and seek new frontiers (全方位合作, 寻求新契机). Our economies are increasingly interconnected. There are new opportunities with technological advances and innovation. We need to remain open to new ideas, and seek new areas of partnerships.
c. Three, to build on each other’s strengths, and form win-win partnerships (相互借鉴, 力求共赢). By learning from one another, drawing on our respective strengths, we can achieve mutual benefits. In turn, we can build our ties in substantial and fruitful ways.
39. Based on these principles, I will now outline five areas of potential cooperation (五大有潜力的合作领域).
40. First, we need to maintain an open, multilateral trading system that promotes the free flow of goods and services across national borders.
41. Global trade remains a powerful enabler of growth. It enables many countries, including major economies, to prosper. Being plugged in to the global market brings economies of scale, with new ideas and markets.
42. In some countries, workers are resisting globalisation as they are anxious about jobs. Some countries respond by adopting protectionism or a bilateral approach to trade matters. President Xi Jinping gave a striking analogy at the World Economic Forum in Davos. He said, “搞保护主义如同把自己关进黑屋子，看似躲过了风吹雨打，但也隔绝了阳光和空气。打贸易战的结果只能是两败俱伤。” (“pursuing protectionism is like locking oneself in a dark room. While wind and rain may be kept outside, that dark room will also block light and air. There is no winner in a trade war”). This is a stark contrast to how some countries have now chosen to turn inwards, and how the Qing dynasty had rejected foreign trade in 1793.
43. Indeed, we need to open our doors and maintain an open, multilateral trading system. These arrangements give countries greater scope to make trade-offs between different sectors, and reach “win-win” deals. Major trading countries have reaffirmed that they still support the multilateral trading system. The remaining 11 members of the TPP have agreed to move ahead on the TPP. Earlier this month at the ASEAN Summit, ASEAN and Hong Kong signed two free trade and investment agreements. As the incoming ASEAN Chairman in 2018, Singapore is committed to working towards the conclusion of the Regional Comprehensive Economic Partnership (RCEP).
44. Second, as innovation drives long-term growth, we need to increase opportunities for knowledge exchange and cooperation.
45. In today’s highly complex world, no single country has all the expertise needed under its roof. We need a network of partnerships and cross-fertilisation of ideas.
46. Singapore and China have been partnering each other in areas that are relevant to our countries. This includes national science programmes and university collaborations, that focus on issues like obesity,
environmental sustainability and smart city technologies. The NUS-Tsinghua Centre for Extreme Search (NExT),
which researches large-scale live social media analysis, has produced useful findings and startups.
47. We are expanding our collaboration to foster innovations by enterprises. Singapore companies are actively engaging the Chinese market to testbed new ideas and build experience with large-scale projects. Yesterday, I launched the Global Innovation Alliance (Beijing) to strengthen partnerships between entrepreneurs and investors in Singapore and China. These alliances link up vibrant innovation centres around the world, for entrepreneurs, innovators and investors to learn from and cooperate with one another. Singapore hopes to launch more of such alliances in China and other parts of the world.
48. 2018 is designated as the ASEAN-China Year of Innovation. As ASEAN Chairman next year, Singapore hopes to encourage cooperation in new technologies, digitalisation and creative solutions, so that our people can gain skills and thrive in this world of disruptive technologies.
49. Third, financial cooperation is important in channelling capital for our businesses to partner one another to seize new opportunities, commercialise innovations, and venture out to third countries.
50. Our banks have had close to a hundred years of history operating in each other’s jurisdictions. Singapore supported the set-up of the Asian Infrastructure Investment Bank (AIIB) since the beginning, and is one of the founding signatories of the AIIB. In the last few years, Singapore’s financial centre has played a catalytic role in promoting greater use of the RMB in the region. More recently, both sides are expanding cooperation in new areas such as capital market connectivity and financial technologies.
51. With a strong financial hub and professional services base, Singapore will support the ventures along the Belt and Road. The Belt and Road Initiative is a way for China to actively connect with its neighbours and economic partners, strengthen co-operation, and reap mutual benefits.
52. Singapore has been an early supporter of the Belt and Road Initiative. According to the Chinese Ministry of Commerce, about one-third of China’s investments into Belt and Road countries last year came through Singapore. Singapore’s investments in China also accounted for 85% of total inbound investments from Belt and Road countries. Singapore’s Lianhe Zaobao (联合早报) and the Singapore Business Federation have also set up a Belt and Road Portal in both Chinese and English. This will help businesses better understand the Belt and Road opportunities.
53. Deeper financial cooperation will benefit our companies investing in Central and Western China, and jointly in third countries, especially in the immediate Southeast Asia region. Through the China-Singapore (Chongqing) Connectivity Initiative, Chongqing companies have achieved lower cost of funding and saved some 152 million yuan in financing costs as they raise funds through Singapore, and expand into Asia to develop Western China.
54. To harness more private capital to support regional infrastructural financing needs, the Monetary Authority of Singapore is working with commercial banks and multilateral organisations to develop infrastructure financing as an investible asset class. This will complement our efforts to enhance infrastructural development and connectivity in the region.
55. Lastly, Singapore can also support project financing and deal structuring, through our base of professional services and growth as an arbitration hub, which is important for long-term projects.
56. Fourth, frequent exchanges among our people keep our ties strong and resilient. Our people-to-people ties are growing and deepening.
57. Our people visit one another for leisure. ASEAN and China have experienced impressive growth in tourism.
58. I am very happy to see the cross-cultural learning and exchanges between our schools, universities, and research institutes, including our collaborations with Tsinghua University.
59. We deepen cultural exchanges to foster mutual understanding. Emeritus Senior Minister Goh Chok Tong and President Xi Jinping launched the China Cultural Centre in Singapore in 2015. It works with schools and community groups on joint programmes on Chinese arts and culture. In addition, the Singapore Chinese Cultural Centre formally opened this year and welcomes visitors to experience Singapore Chinese art and culture. Prominent groups such as the Singapore Chinese Orchestra and Beijing People’s Art Theatre perform regularly in both countries. Singaporeans like Joanna Dong (董姿彦) and Nathan Hartono (向洋) have entered the finals of Sing! China (中国新歌声), to compete with and be inspired by the very best talents in China, and vice versa. I hope that they have a fan base in China and that some of you are their fans too!
60. Through deeper mutual understanding of our culture and experiences, we can forge long-lasting bonds.
61. Fifth, to truly achieve a higher quality of life, the environment where we live and work matters too.
62. Global carbon emissions are expected to reach a record high this year. The call for greater environmental sustainability is more urgent than ever.
63. Singapore’s efforts in advancing environmental sustainability started in the 1960s with the movement to transform Singapore into a Garden City, because, as Mr Lee Kuan Yew put it, “a blighted urban jungle of concrete destroys the human spirit”.
64. Making China beautiful is at the centre stage of the Chinese policy agenda. The Tianjin Eco-city has broadened to include collaborations in sustainable and innovative city-planning and urban solutions. It is now a vibrant and liveable city. Singapore companies are also learning from China’s experiences in renewable energy and cleantech.
65. The Chinese have a saying “前人种树，后人乘凉”. Our ancestors planted the trees and we are enjoying the shade. Indeed, we need to leave a more beautiful environment for future generations.
66. So, to sum up, the five areas of potential cooperation are trade, innovation, finance, people-to-people ties, and environmental sustainability.
67. Finally, let me conclude by talking about the one vision (一个理念). At the heart of our efforts is to build a better life and a better home for our people (永续发展，造福人民).
68. At the national level, we need to think long-term and implement structural changes and citizen-centric policies. Fiscal and monetary policies may dampen market cycles and maintain macroeconomic stability. But to ensure sustainable growth, we need to tackle structural changes in our economies, by helping our people and companies adapt to technological changes and global competition, and to reduce income inequality.
69. Therefore, in Singapore, our approach has always involved intertwining social and economic policies, as they go hand in hand. For example, we launched the SkillsFuture movement to help our people gain new skills throughout their careers, so that they can take up better jobs and enjoy higher wages. Economic growth must result in a better life for our people.
70. Undertaking long-term structural reforms is not new to China. China has put balanced and equitable development at the centre of its policy agenda. This means that China will not just pursue headline GDP growth for its own sake, but rather, strive to enhance the economic welfare of its peoples. China’s efforts in providing social safety nets and assistance for those left behind will be closely watched by countries facing similar challenges.
71. Over the years, our officials have also learnt from one another how to strengthen governance and leadership through our joint forums.
Conclusion - Preparing for a Better Future
72. So let me conclude. I’ve have sketched out some challenges in the future.
73. Nobody can predict the future. But we can prepare for it.
74. If we look forward to the next 5 or 10 years, there are challenges that need to be overcome. With the right policies, these can evolve into opportunities for us to achieve inclusive and sustainable growth.
75. The challenges which I’ve talked about earlier are complex – and especially so for China, a nation of more than 1.3 billion people. As tomorrow’s leaders in business and
government, the future is in your hands. Moving forward, there will be increasing cooperation at the government, business and people-to-people levels
to meet evolving needs and form all-round, win-win partnerships.
76. Singapore and China share many common interests and a long friendship that goes back many years. China’s transformation has been very impressive. We look forward to working closely together with China and people from around the world to promote greater peace, stability and prosperity in the region.
77. Together, we will forge a better future for our people. Thank you very much.
 Speech by George Yeo, Minster for Foreign Affairs, at the 35th Anniversary of the Singapore-China Business Association, 29 Dec 2005
 Source: 陈加昌, 《我所知道的李光耀: LKY Whom I Knew》, 2015.
 Source: Lee Kuan Yew, One Man’s View of the World, 2013.
 Source: Graham Allison and Robert D. Blackwill, Lee Kuan Yew: The Grand Master’s Insights on China, the United States, and the World, 2013.
 Source: Lee Kuan Yew, One Man’s View of the World, 2013.
 The new pact is called the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP).